1Questions
Which decisions the reporting should inform.
Management Accounting
Reporting should help you choose. Management accounting answers not to the state but to your decisions: where results are created, where they're lost and how much money you'll have in six weeks.
Sound familiar?Decisions are made based on statutory accounting figures or the bank balance, Management figures are assembled by hand and late, You can't name the margin of a specific product without a separate calculation
Accounting and Financial Records
How we work
1
2Data structure
Business lines, responsibility centers, sources.
3Format and rhythm
The reports, when they're ready and who reviews them.
4Link to decisions
Plan versus actual and a review of deviations with their owners.
Sound familiar?
- Decisions are made based on statutory accounting figures or the bank balance.
- Management figures are assembled by hand and late.
- You can't name the margin of a specific product without a separate calculation.
What usually lies behind it
Management accounting is often postponed because people imagine it as a big system. You can start with three reports, one page each: weekly cash flow 13 weeks ahead, profit by business line and a balance of obligations. An exact report in six weeks is less useful than an approximate one in three days.
What you get
Three core reports and the method behind them.
A structure of revenue and costs by business line.
A regular plan-versus-actual review.
The cost of waiting
If nothing changes
- 01
Decisions will follow tax logic.
- 02
Loss-making lines will hide in the average.
- 03
Cash gaps will come as a surprise.
When you don't need this service
- The statutory accounts aren't reliable. Recovery comes first; otherwise management reports will inherit the errors.
- You need a forecast and scenarios. Then a financial model.
How to tell it worked
Speed
on which day after month-end the result is ready.
Comparability
whether months can be compared with each other.
Decisions
which decisions were made based on the management reports.
Questions
Who should run management accounting?
In order of the business's maturity: the owner using the three reports, a dedicated finance manager, a part-time CFO. Handing it to the accountant works worse: their priority is different.
Do we need to change our systems?
Not necessarily. First we define the minimum set of data and the source of truth for key indicators.
Why do management and statutory figures differ?
They answer different questions. A discrepancy is normal. Failing to explain it is the mistake.
Related
Services: Financial Model · Profitability Analysis · Odoo Implementation Materials: Two sets of books: why an owner needs both · Unit economics for owners: seven numbers
Related to this service
Public company case analysis
Nokia
In 2007 Nokia sold more than half of the world's smartphones, and in 2013 it sold its phone business. A case analysis based on research by INSEAD and Aalto University.
